There’s a job advertised in your local area that pays $21 an hour, but how much does that work out per year? Well, that’s what we’re here to find out.
In this article, I will explain how to convert your hourly wage into a gross yearly income. We will also work out the monthly, weekly, and daily totals that $21 an hour will give you. Plus, I’ll let you know how to calculate the amount you can expect to take home after tax and look at the kind of lifestyle afforded by this level of income.
So, $21 An Hour Is How Much a Year?
Let’s crunch some numbers!
Annual Income At $21 An Hour
To work out how much you can earn in a year, we need to calculate the total number of hours worked during that period. For our calculations, we will assume a total of eight hours worked per day, a working week of five days, and a full 52 weeks of work.
If we multiply those numbers together, this will give us our total hours worked for the year:
- 8 x 5 x 52 = 2,080 total yearly hours.
After working out the total number of hours worked over a year, we can calculate our highest potential annual earnings by simply multiplying this figure by the hourly rate of $21:
- 2,080 hours x $21 = $43,680 per year.
So, that’s our main question worked out. Putting in a 40-hour week for 52 weeks of the year will result in an income of $43,680 per year.
Realistically, most people like to take at least two weeks off work per year. Let’s remove 80 hours from our yearly total to get a more accurate picture of annual income at $21 an hour.
- 2,080 – 80 = 2,000 total yearly hours.
- 2,000 x $21 = $42,000 per year.
To align with the typical payment cycle of most employees, we will be adopting a monthly measurement of four work weeks. Assuming a standard workweek of 40 hours, we can calculate the total number of hours worked per month by multiplying this total by the number of weeks worked in a month:
- 40 hours x 4 weeks = 160 hours worked per month.
No, all we have to do is multiply this by the hourly rate:
- 160 hours x $21 = $3,360 per month.
This is an easy one. As we have assumed a 40-hour work week, we simply multiply this by the hourly rate:
- 40 hours x $21 = $820 per week.
Even easier. We’re putting in 8-hour days, so once again, we simply multiply this number by our hourly rate:
- 8 hours x $21 = $168 per day.
While working out your annual gross income is a helpful initial step, it does not provide an accurate picture of the amount you will ultimately receive after accounting for various deductions. Federal income tax, Social Security, Medicare, and state taxes will significantly reduce your earnings. To determine what percentage of your income the authorities will take, we need to do some trickier calculations.
Federal Income Tax
Among the various deductions, Federal Income Tax typically has the most significant impact. To determine the amount you will owe on a $21 hourly wage, assuming you work the full 52 weeks in a year, we must consult the applicable Federal Income Tax brackets and do the relevant math.
Given that your annual income would be $43,680 in this scenario, we can refer to the table below, which outlines the relevant tax brackets and their corresponding tax rates for the 2023 tax year:
|2023 Federal Income
|$0 to $11,000||10%||$0 – $11,000 = $11,000
$11,000 x 0.1
|$11,001 to $44,725||12%||$43,680 – $11,001 = $32,679
$32,679 x 0.12
We can now add the amount owed in each of the two brackets for our overall Federal income tax bill:
- $1,100 + $3,921.48 = $5,021.48 Federal income tax owed.
These refer to the mandatory contributions you must make towards Social Security and Medicare, which will further reduce your income by 7.65%. Let’s now calculate the exact amount that will be diverted toward these programs:
- $43,680 x 0.0765 = $3,341.52 FICA taxes owed.
State Income Tax
Calculating your state income tax is more complicated. While seven states in the US do not levy any income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming), the remaining states may have a fixed tax rate or tax brackets with different rates based on income levels.
After analyzing the various rates across the country, we can estimate that if you live in a state that has its own income tax, you can expect to pay an average of around 4% of your income:
- $43,680 x 0.04 = $2,184 state income tax owed.
Overall Tax Owed
|Federal Income Tax||$5,021.48|
|State Income Tax||$2,184|
After adding our various tax bills together, we get a total tax bill of $10,547. If we subtract this from our gross income, we will have our take-home total:
- $43,680 – $10,547 = $33,133 after-tax net income.
To work out what this is as a percentage, we need to divide the total tax bill by our gross income and multiply by 100:
- $10,547 / $43,680 x 100 = 24.15% of your wages taken in taxes.
The following table illustrates how the tax rate affects your hourly, weekly, and monthly earnings:
|Period||Pretax rate||After-tax income
|Monthly rate (4 Weeks)||$3,360||$2,250.23|
How does $21 an hour measure up nationally?
If you clock 40 hours a week, every week of the year, your gross income of $43,680 puts you around the 46 percentile of American incomes. Whilst you are far from the lowest income earners in the country, a full 54% of American workers earn more than you.
The average hourly wage for American workers in 2022 was $26 an hour, which equates to $54,132. You’ll need to increase your hourly income by $5 an hour to make that much.
Expected quality of life earning $21 an hour
Earning $21 an hour can provide a comfortable quality of life, but much depends on location and individual circumstances. Generally, this income level can afford a reasonable standard of living in many parts of the United States.
You should be able to afford a modest apartment or home, reliable transportation, and the ability to enjoy some entertainment and dining out. However, if you live in a city with a high cost of living, such as New York, this income isn’t going to stretch nearly as far.
Would You Like To Know More About Salaries?
Then we can help! Let’s start with the difference between Salary Vs Hourly Pay, as well as Gross Pay Vs Net Pay, or perhaps you’d like to know How Do I Convert Salary To Hourly To Calculate A Part Time Rate and How To Get A Pay Stub.
Hourly to annual conversion we covered include 15 An Hour Is How Much A Year, 13 An Hour Is How Much A Year and 18 Dollars An Hour is How Much A Year, along with 25 An Hour Is How Much A Year, and 20 An Hour Is How Much A Year in 2023.
But that’s not all! We also put together guides on how to calculate your hourly rate, such as $30,000 a Year is How Much An Hour, $36,000 a Year is How Much An Hour, or, moving up the wage scale, 60k A Year Is How Much An Hour, and for the high earners, check out $100000 A Year Is How Much An Hour?
If your hourly wage is $21 per hour, you are earning below the national average, but we all have to start somewhere. This is equivalent to $43,680 gross income per year if you are prepared to work 40-hour weeks all year round. With overtime, this could obviously be increased.
Once the Inland Revenue Service has taken its chunk, you will be left with approximately $33,133 to do with as you see fit. This level of income won’t allow you to live anywhere, but watch what you spend, and you should be able to get by without too many issues in most areas.
Good luck with your new job and salary!